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Tuesday, 06 September 11
INDONESIAS PROPOSED COAL EXPORT BAN MAY HAVE IMPACT ON THE INDIAN POWER SECTOR - DIPESH DIPU
.jpg) COALspot.com - This is a special interview about Indonesian proposed coal export ban by 2014, with Mr. Dipesh Dipu, Director of Deloitte Touche Tohmatsu, India.
The Indonesian government is currently in the process of drafting a new regulation that could ban the export of low-grade coal by January 12, 2014. This is likely to apply to coal below 5700 kcal/kg on air dried basis in value.
As of now Indonesia is producing around 150 million tons of coal with calorific value below 5700 GAD (according to chairman of Indonesian coal mining association). However by 2014, there are possibilities the total production of below 5700 GAD coal may reach more than 200 million per annum.
Will Indonesian coal export ban impact on the Indian fuel requirements?
The earlier grade of coal that was being considered for proposed ban has GCV of 5100 kcal/kg of less (adb), which can be comparable to 3800-4200 kcal/kg (arb) domestic coal available in India. This grade of coal has found favor in India primarily due to likely price advantage but economics of power generation based on such grade of imported coal may be a suspect. This considering that such grades of coal from Indonesia typically have high moisture content, which makes transportation cost per unit of energy generated higher. The quantum of the low grade of coal (<5100 kcal/kg adb) procured from Indonesia is likely to remain relatively low.
However, if the new definition of low grade coal is applied (<5700 kcal/kg adb), it may be reasonable to believe that such a ban may have impact on the Indian power sector as volumes in this grade of coal are expected to rise in the proportion of coal exports to India. Several of the acquisitions made by Indian power generation companies in Indonesia have been in coal blocks that will produce coal of this grade, and a blanket ban on the exports can jeopardize power plant development in India.
On the other hand, the domestic Indonesian market may not be prepared to consume all the coal mined of this grade in view of the power generation capacity addition plans in Indonesia. In such a case, the coal mine development is likely to be deferred. The Indonesian law makers may need to reconsider domestic market demand, investment climate in coal sector and impact of the legislation on the export revenues.
What is the alternative source for Indian power industry if the proposed coal export ban come into effect by 2014?
Indian power generation companies have been forced to look out for coal assets abroad due to the investment and regulatory environment within the country. India boasts of more than 110 billion tonnes of coal reserves, which largely fall within a 300 meters of depth. If the regulatory and investment environment is amended to allow greater participation of private sector Indian dependence on imports will be reduced.
However, for imports, India will continue to look at Indonesia, South Africa, Australia and newer destinations like Mozambique and Columbia. But these sources also have constraints, domestic demands in South Africa is likely to restrict quantum jump in exports out of South Africa. Indonesia has also proposed domestic market obligations. Mozambique may have infrastructure constraints for large volumes of coal being transported from Tete province to ports of Maputo, Ncala or Beira. Australian coal is of high quality but may have higher costs of mining and transport.
What would be the additional cost if Indian consumers switch their sourcing origin from Indonesia?
Indonesia has competitive advantage due to its geographical closeness. However, on a per tonne basis, assuming comparable quality, costs of transport may make marginal difference when compared with South Africa and Mozambique.
When compared to Australian coal, due to the high quality, cost of energy may well be comparable even though shipping costs are higher. Between Indonesian coal (5500 kcal/kg adb priced at USD 90 per tonne) and Australian coal (6500 kcal/kg adb priced at USD 120 per tonne), indicative variable cost difference of power generation may be about Indian Rupees 0.20 to 0.30 per kWh (electricity unit) in favor of Indonesian coal.
Will it affect Indian economy growth or this coal export ban is ignorable as India can easily identify alternative sources of fuel?
The magnitude of growth in power generation in India will necessarily mean that coal will remain the mainstay. Natural gas has had issues of availability. Nuclear plant development is facing socio-political challenge in view of the risks of technology failure. Development of hydel power has also faced issues of land acquisition, rehabilitation & resettlement apart from the technical issues of hydro-geological features. Renewable sources such as solar and wind generation are still projected to constitute a small portion of India power generation mix. Identifying an alternative source that can match coal in its accessibility, availability and affordability in the context of scale of capacity addition required in India is a challenge.
What is the Indian government's role on this issue, whether government has to come out with the solution such as easing Indian mining and environment law, open up mining for foreigners, G2G arrangement, etc…?
There is a need to look at domestic sources with pro-active and constructive approach and make all necessary legal and statutory amendments that make the resources available and mineable. Easing the regulations may not be one of such measures but making those regulations work in sync with each other in a time bound and predictable manner must certainly be.
There is certainly a case for opening the domestic coal sector for private participation, including independent miners, and for foreign participation so that newer technology and enhanced scale of operations are implemented in India. The regulation also needs to permit risk capital to come in for prospecting and exploration.
For imports the G2G relations can be leveraged to secure coal assets. India has good relationship with Indonesia and has also signed a tax treaty with Mozambique in 2010 which will facilitate investments. Government may also engage with these countries to ease exports to India and extend fiscal support to coal mining companies investing in mining and associated infrastructure development.
About Dipesh Dipu
Dipesh Dipu works as Director with Deloitte Touche Tohmatsu India Pvt. Ltd in the Energy and Resources consulting practice of the firm and anchors the Firm’s initiative in the mining and metals sectors.
He is a mining engineering graduate from Indian School of Mines and is a Chartered Financial Analyst (CFA). He has also done executive program in business management from Indian Institute of Management Calcutta. Dipesh has recently been awarded the Abheraj Baldota Gold Medal for the Young Mining Engineer of the Year 2007 by the Mining Engineers’ Association of India in recognition of his contributions in the improvement of mining industry in India.
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Wednesday, 05 January 22
CHINA COAL FUTURES SURGE ON SUPPLY WORRIES AMID INDONESIA EXPORT BAN - REUTERS
China’s thermal coal futures surged by as much as 7.8per cent to kick off 2022 on concerns of supply disruptions after Indonesia, its biggest ...
Wednesday, 05 January 22
INDONESIA WARNS COAL SUPPLY CRUNCH NOT OVER AS CHINA PRICES RALLY - REUTERS
Indonesia has warned that its coal supply situation remains critical, ahead of Wednesday’s (Jan 5) review of its export ban, unnerving global ...
Tuesday, 28 December 21
INDIA'S ADANI NEARS FIRST COAL SHIPMENT FROM SHUNNED AUSTRALIAN MINE - REUTERS
India’s Adani Group ADEL.NS is preparing to ship the first coal cargo from Australia’s most controversial mine, after battling a seven- ...
Thursday, 23 December 21
COAL TO STAY AS MAJOR SOURCE OF ENERGY IN FORESEEABLE FUTURE: JOSHI - BUSINESS STANDARD
Coal will stay as a major source of energy in the foreseeable future as it is an affordable source of energy with substantial reserve, Parliament w ...
Thursday, 23 December 21
ANNUAL U.S. COAL-FIRED ELECTRICITY GENERATION WILL INCREASE FOR THE FIRST TIME SINCE 2014 - EIA
From December 20 through December 30, Today in Energy will feature some of our favorite articles from 2021. Today’s article was originally pu ...
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- Merrill Lynch Commodities Europe
- Trasteel International SA, Italy
- New Zealand Coal & Carbon
- Antam Resourcindo - Indonesia
- Minerals Council of Australia
- South Luzon Thermal Energy Corporation
- Metalloyd Limited - United Kingdom
- ICICI Bank Limited - India
- Coalindo Energy - Indonesia
- Chamber of Mines of South Africa
- Australian Commodity Traders Exchange
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Oldendorff Carriers - Singapore
- Eastern Coal Council - USA
- CIMB Investment Bank - Malaysia
- Medco Energi Mining Internasional
- Economic Council, Georgia
- Anglo American - United Kingdom
- Tata Chemicals Ltd - India
- Chettinad Cement Corporation Ltd - India
- TeaM Sual Corporation - Philippines
- International Coal Ventures Pvt Ltd - India
- London Commodity Brokers - England
- Commonwealth Bank - Australia
- AsiaOL BioFuels Corp., Philippines
- Electricity Generating Authority of Thailand
- Sical Logistics Limited - India
- Videocon Industries ltd - India
- Gujarat Electricity Regulatory Commission - India
- Coal and Oil Company - UAE
- GMR Energy Limited - India
- Vedanta Resources Plc - India
- Energy Link Ltd, New Zealand
- Parliament of New Zealand
- Iligan Light & Power Inc, Philippines
- Bukit Baiduri Energy - Indonesia
- Deloitte Consulting - India
- Mercuria Energy - Indonesia
- Indonesian Coal Mining Association
- Karaikal Port Pvt Ltd - India
- European Bulk Services B.V. - Netherlands
- Leighton Contractors Pty Ltd - Australia
- PowerSource Philippines DevCo
- Petron Corporation, Philippines
- Uttam Galva Steels Limited - India
- VISA Power Limited - India
- Gujarat Sidhee Cement - India
- Billiton Holdings Pty Ltd - Australia
- Kapuas Tunggal Persada - Indonesia
- Ministry of Finance - Indonesia
- Savvy Resources Ltd - HongKong
- Kohat Cement Company Ltd. - Pakistan
- Krishnapatnam Port Company Ltd. - India
- Karbindo Abesyapradhi - Indoneisa
- PetroVietnam Power Coal Import and Supply Company
- McConnell Dowell - Australia
- Ind-Barath Power Infra Limited - India
- Orica Australia Pty. Ltd.
- Australian Coal Association
- Cigading International Bulk Terminal - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Indo Tambangraya Megah - Indonesia
- Indian Energy Exchange, India
- Mercator Lines Limited - India
- Xindia Steels Limited - India
- OPG Power Generation Pvt Ltd - India
- Coastal Gujarat Power Limited - India
- Therma Luzon, Inc, Philippines
- Baramulti Group, Indonesia
- Mintek Dendrill Indonesia
- Rio Tinto Coal - Australia
- Jorong Barutama Greston.PT - Indonesia
- CNBM International Corporation - China
- ASAPP Information Group - India
- Port Waratah Coal Services - Australia
- Globalindo Alam Lestari - Indonesia
- Georgia Ports Authority, United States
- Heidelberg Cement - Germany
- Bhoruka Overseas - Indonesia
- Manunggal Multi Energi - Indonesia
- Energy Development Corp, Philippines
- Makarim & Taira - Indonesia
- Ministry of Mines - Canada
- Bangladesh Power Developement Board
- Bhatia International Limited - India
- PNOC Exploration Corporation - Philippines
- Indika Energy - Indonesia
- Salva Resources Pvt Ltd - India
- Toyota Tsusho Corporation, Japan
- Bahari Cakrawala Sebuku - Indonesia
- Siam City Cement PLC, Thailand
- Kobexindo Tractors - Indoneisa
- Independent Power Producers Association of India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- SMG Consultants - Indonesia
- Grasim Industreis Ltd - India
- The University of Queensland
- Sojitz Corporation - Japan
- The Treasury - Australian Government
- Lanco Infratech Ltd - India
- Indian Oil Corporation Limited
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Ambuja Cements Ltd - India
- Star Paper Mills Limited - India
- Bayan Resources Tbk. - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Jindal Steel & Power Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Bharathi Cement Corporation - India
- Price Waterhouse Coopers - Russia
- Posco Energy - South Korea
- Dalmia Cement Bharat India
- Kumho Petrochemical, South Korea
- Central Electricity Authority - India
- Ministry of Transport, Egypt
- Orica Mining Services - Indonesia
- Pendopo Energi Batubara - Indonesia
- Electricity Authority, New Zealand
- Simpson Spence & Young - Indonesia
- San Jose City I Power Corp, Philippines
- Agrawal Coal Company - India
- Sindya Power Generating Company Private Ltd
- Riau Bara Harum - Indonesia
- Timah Investasi Mineral - Indoneisa
- Romanian Commodities Exchange
- Straits Asia Resources Limited - Singapore
- Semirara Mining and Power Corporation, Philippines
- Rashtriya Ispat Nigam Limited - India
- Attock Cement Pakistan Limited
- The State Trading Corporation of India Ltd
- LBH Netherlands Bv - Netherlands
- Vizag Seaport Private Limited - India
- Larsen & Toubro Limited - India
- Kepco SPC Power Corporation, Philippines
- Kartika Selabumi Mining - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Kaltim Prima Coal - Indonesia
- PTC India Limited - India
- Borneo Indobara - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Meralco Power Generation, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Bulk Trading Sa - Switzerland
- Bank of Tokyo Mitsubishi UFJ Ltd
- White Energy Company Limited
- Thiess Contractors Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Altura Mining Limited, Indonesia
- Maheswari Brothers Coal Limited - India
- Siam City Cement - Thailand
- Petrochimia International Co. Ltd.- Taiwan
- Bhushan Steel Limited - India
- Barasentosa Lestari - Indonesia
- Bukit Makmur.PT - Indonesia
- IEA Clean Coal Centre - UK
- Jaiprakash Power Ventures ltd
- Edison Trading Spa - Italy
- Parry Sugars Refinery, India
- Bukit Asam (Persero) Tbk - Indonesia
- Kideco Jaya Agung - Indonesia
- SMC Global Power, Philippines
- Singapore Mercantile Exchange
- Planning Commission, India
- Meenaskhi Energy Private Limited - India
- Indogreen Group - Indonesia
- Directorate Of Revenue Intelligence - India
- Essar Steel Hazira Ltd - India
- Wood Mackenzie - Singapore
- Neyveli Lignite Corporation Ltd, - India
- IHS Mccloskey Coal Group - USA
- Sree Jayajothi Cements Limited - India
- Global Coal Blending Company Limited - Australia
- Sinarmas Energy and Mining - Indonesia
- Samtan Co., Ltd - South Korea
- Aditya Birla Group - India
- Pipit Mutiara Jaya. PT, Indonesia
- Carbofer General Trading SA - India
- Intertek Mineral Services - Indonesia
- Africa Commodities Group - South Africa
- Global Green Power PLC Corporation, Philippines
- Eastern Energy - Thailand
- Latin American Coal - Colombia
- Aboitiz Power Corporation - Philippines
- Formosa Plastics Group - Taiwan
- Madhucon Powers Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Mjunction Services Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Global Business Power Corporation, Philippines
- Renaissance Capital - South Africa
- Sarangani Energy Corporation, Philippines
- GVK Power & Infra Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Binh Thuan Hamico - Vietnam
- Malabar Cements Ltd - India
- Cement Manufacturers Association - India
- Semirara Mining Corp, Philippines
- Goldman Sachs - Singapore
- Sakthi Sugars Limited - India
- MS Steel International - UAE
- Marubeni Corporation - India
- Thai Mozambique Logistica
- Power Finance Corporation Ltd., India
- GAC Shipping (India) Pvt Ltd
- Central Java Power - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Tamil Nadu electricity Board
- Maharashtra Electricity Regulatory Commission - India
- Interocean Group of Companies - India
- Standard Chartered Bank - UAE
- Ceylon Electricity Board - Sri Lanka
- Offshore Bulk Terminal Pte Ltd, Singapore
- Banpu Public Company Limited - Thailand
- SN Aboitiz Power Inc, Philippines
- Wilmar Investment Holdings
- India Bulls Power Limited - India
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